A broad semiconductor rally erupts as a RMB 600 billion leader surges

A broad rally swept the semiconductor sector in early trading today, with the Hang Seng Tech Index rising more than 1% at one point and SMIC’s Hong Kong shares surging over 7%; mainland A‑shares also climbed above 5%, lifting SMIC’s market capitalization to nearly RMB 600 billion. The advance extended across the industry, as Haiguang Information gained in excess of 6%, Moore Threads rallied more than 11%, and the semiconductor index rose over 3%.

Market participants attributed the strength to three principal catalysts. First, DeepSeek’s unexpected release of its new flagship model DeepSeek‑V4 on April 24 sparked renewed investor interest in semiconductor names. Second, the momentum behind domestic substitution has accelerated, with on‑shore equipment and chip suppliers capturing a growing share of procurement. Third, industry fundamentals have improved, as evidenced by strong corporate results and the performance of international benchmarks such as the Philadelphia Semiconductor Index.

DeepSeek’s V4 launch on April 24, issued without prior notice and released as open source, drew attention for delivering inference performance comparable to leading closed‑source models while maintaining a cost‑efficient profile and enhanced long‑context capabilities. Research from Huatai Securities described the V4 series and accompanying paper as a systematic upgrade across model architecture, training processes and infrastructure focused on practical, low‑cost support for a one‑million‑token context. Goldman Sachs’ Ronald Keung team characterized the open‑source V4 as a continuation of DeepSeek’s efficiency‑first, open approach, noting that architectural improvements materially reduced long‑context inference costs and that the company is explicitly betting on compatibility with Huawei’s Ascend chips. The report argued that the release intensifies competition among Chinese AI model developers, with programming ability, task completion rates and multimodal capabilities emerging as key differentiators.

The domestic substitution narrative has strengthened. Public data indicate that the localization rate for semiconductor equipment exceeded a critical threshold of 35% in early 2026, up from roughly 15% in 2024, signaling a shift from experimental use to scaled replacement of core tools in new fab lines. IDC’s latest research shows that in 2025 Chinese domestic vendors captured nearly 41% of the cloud AI accelerator market, shipping approximately 1.65 million units. As trillion‑parameter models such as DeepSeek‑V4 achieve deeper adaptation to domestic compute platforms like Ascend, local AI chips are progressively eroding Nvidia’s long‑standing dominance.

Policy developments have reinforced the substitution trend. On April 22, the U.S. House Foreign Affairs Committee advanced the MATCH Act and related export control measures that would prohibit sales of key semiconductor manufacturing equipment to China and restrict after‑sales services, spare parts and technical support for previously sold systems. China’s Ministry of Commerce stated it is monitoring the situation, reiterated opposition to the broad application of national security measures and warned that such legislation, if enacted, would severely disrupt international trade order and destabilize the global semiconductor supply chain; authorities said they will assess impacts on Chinese interests and take necessary measures to protect legitimate rights.

Industry sentiment has improved globally. The Philadelphia Semiconductor Index has posted 17 consecutive gains and is up more than 38% month‑to‑date, reflecting a shift in market focus from speculative AI narratives to earnings delivery and broad supply‑chain strength. Intel’s guidance exceeded expectations, and memory vendors have reported exceptional margins; SK Hynix disclosed Q1 2026 revenue of KRW 52.57 trillion, a year‑on‑year increase of 198.1%, with net profit of KRW 40 trillion and an operating margin of 72%. Investment banks project substantial DRAM price appreciation in 2026 driven by AI data center demand, and the market now treats memory as a high‑value commodity. Following inventory adjustments in 2024–2025, chip inventories for traditional consumer electronics have fallen to low levels, prompting a restocking cycle in 2026 that, combined with AI infrastructure demand, has tightened foundry capacity—particularly at advanced nodes.

On the domestic front, Moore Threads’ financial results exceeded expectations. In its disclosures on April 26 covering Q1 2026 and fiscal 2025, the company reported Q1 revenue of RMB 738 million, up 155.35% year‑on‑year; net profit attributable to shareholders reached RMB 29 million, an increase of RMB 142 million; and adjusted net loss narrowed to RMB 54 million, an improvement of 60.10% year‑on‑year. MuXi Technology has indicated it could reach breakeven as early as 2026.